Some reports suggest that online video advertisements will be up by 30% in 2015. Meanwhile, Facebook Inc (NASDAQ:FB) has announced last week about the acquisition of video tech startup QuickFire Networks. Facebook Inc (NASDAQ:FB) was mainly interested in the video compression technology possessed by QhickFire, which might help in faster video uploads and thereby increasing the video content in the platform. MoffetNathanson Senior Analyst, Craig Moffett talked on Bloomberg TV about the video advertising and Facebook Inc (NASDAQ:FB)’s part in it.
Everyone is talking about cutting the cord and it is slowly becoming the hot topic in United States. Facebook Inc (NASDAQ:FB) with its new acquired ability can increase the video contents and the question arises if Facebook Inc (NASDAQ:FB) is the biggest challenge to cable bundle. Moffett feels that Facebook Inc (NASDAQ:FB) is a real challenge to advertising bundle and he thinks that this where the actual cord cutting starts.
He said that the change in ecosystem is not due to the cord cutting at the moment, which might happen in the future, but he thinks that the change is mainly due to the fact that people are taking advertising money out of traditional television. He feels that the advertising money is starting to come out of Pay TV and he said that it is a scary proposition if you are a cable TV.
Facebook Inc (NASDAQ:FB) is doing a lot of targeted video advertisements, but question in mind is that are people watching these videos. Moffett thinks that people are actually watching it.
“Here is my sense of the whole video bundle. Everybody is looking at new aggregation models. Everybody is looking at dish network aggregating a bunch of different channels or Sony is about to come online and aggregate a bunch of different channels, I think we are all looking in the wrong place. I think if you are thinking about what a Millennial is doing? Millennial’s aren’t saying, I need a better way to get the same old dog food that everybody else is used to watching. The Millennial’s are saying I don’t care about any of that stuff. I am actually entertaining myself with a completely different mix of media from social media, that isn’t the traditional Pay TV channels just put together in different packages,” Moffett said.
Moffett pointed out that there are technology out there which could make media contents at 1/10th of the cost used by some big media names and he thinks that every media company CEO must be afraid of Mark Zuckerberg’s experiment with the video contents. He said that they should be afraid not because of how it is going to disrupt the media, but because of what it could do to deflate advertising CPM’s.
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